On January 25, 2017, Judge Amos Mazzant entered a preliminary injunction enjoining the Department of Health and Human Services (HHS) from implementing or enforcing an interim final rule that HHS adopted in December. The rule would have required end-stage renal disease (ESRD) facilities that make contributions to charitable organizations that in turn pay private insurance premiums for the patients of the facilities to 1) disclose certain information to their patients and 2) notify, and receive certain assurances of acceptance of premium contributions from, the insurers that cover them.
Judge Mazzant had earlier entered a temporary restraining order blocking the rule from going into effect temporarily, but the preliminary injunction blocks it effectively until the court enters a final order.
The decision is of interest both because of the issue it addressed and because of the reasoning on which the court based its decision, which could have implications for the Trump administration's efforts to rapidly reverse Obama administration policies regarding the ACA. HHS adopted the rule as an interim final rule without going through the normal Administrative Procedures Act notice and comment rulemaking process: publishing a proposed rule, accepting comments, and then, after due consideration of those comments, publishing a final rule. HHS was reacting to loud complaints from insurers that third party payments for individual insurance coverage for ESRD patients was destabilizing marketplace insurance markets. The insurers claimed that the ESRD patients are eligible for Medicare or Medicaid coverage, but that the ESRD facilities and the charities they supported were enrolling the patients in private coverage because the private insurers paid much higher rates to the providers than did the public programs.
While HHS' primary motivation in adopting the rule seems to have been the complaints of insurers, HHS justified the rule by claiming that it was necessary to protect ESRD patients from negative effects on their ability to get kidney transplants, from high cost-sharing, and from possible mid-year disruptions in care. Judge Mazzant concluded HHS had offered no support for these claims. He also held that the rule was causing large financial losses to dialysis facilities, was depriving ESRD patients of access to the providers of their choice, and was causing some of them to be uninsured. He concluded, therefore, that the requirements for a preliminary injunction were met and enjoined the enforcement of the rule.
Judge Mazzant's Reasoning
As noted, the reasoning of the court on the legal issues in the case may be of even greater interest than the immediate effect of its ruling. HHS had issued a request for information in August seeking information on third-party payment practices but had not published a proposed rule. It had published the interim final rule with a comment period, but had not sought or considered comments before promulgating the rule.
Judge Mazzant observed that an agency may issue a rule without prior notice and comment for "good cause" when notice and comments would be "impractical, unnecessary, or contrary to the public interest." HHS contended that it had good cause for waiving notice and comment procedures, but Judge Mazzant concluded that he did not have to give any deference to HHS' conclusion. The good cause exception should be applied only when prior "announcement of a proposed rule would enable the sort of . . . manipulation the rule sought to present," or in true emergencies, such as the situation that justified changed FAA rules adopted in the wake of the September 11 attacks.
A narrow construction of the good cause exception, the court held, is necessary "to avoid providing agencies with an 'escape clause' from the requirements Congress prescribed." The court observed that notice and comment rulemaking "produces nuanced and detailed regulations, [which] greatly benefit from expert and regulated entity participation." The court also held that HHS' request for information did not provide adequate notice to the plaintiffs of the rulemaking being considered.
The court further held that, independent of the lack of notice and comment issue, the rule should be set aside under the Administrative Procedures Act as "arbitrary and capricious." HHS had not considered, the court held, the problems its rule would cause for ESRD patients. Moreover, in adopting the interim final rule, HHS changed its position from long-standing HHS Office of Inspector General guidance concerning ESRD facility charitable donations. HHS did not provide a reasoned explanation as to why it was changing its position. Its rule was thus in violation of the APA.
What Judge Mazzant's Reasoning Could Mean For The Trump Administration
The implications of the ruling are obvious. The Trump administration's executive order on the Affordable Care Act strongly suggests that the new administration intends to rapidly alter Obama administration policies implementing the ACA. Most of those policies are established in federal rules and can only be changed through notice and comment rulemaking.
The agencies will have to give notice of their proposed changes, solicit comments, and carefully consider comments that they receive both supporting and opposing their proposals. They will have to give reasons why changes in policy are needed. If the Trump administration proceeds precipitously, ignoring the requirements of the APA (which the executive order instructed agencies to observe), it will likely find itself facing injunctions such as the one entered by Judge Mazzant.
Court Denies Requests To Vacate Injunction, Allow New Parties In Challenge To ACA Nondiscrimination Rule
In another ACA-related litigation development, on January 24, 2017, Judge Reed O'Connor of the Federal District Court for the Northern District of Texas entered a further order in litigation challenging the ACA Section 1557 nondiscrimination rule. As reported in an earlier post, on December 31, 2016, Judge O'Connor entered a nationwide injunction in Franciscan Alliance v. Burwell prohibiting the Department of Health and Human Services (HHS) from enforcing the nondiscrimination rule insofar as the rule prohibits discrimination on the basis of gender identity or termination of pregnancy.
Following that decision, the American Civil Liberties Union and the River City Gender Alliance renewed their motion to intervene in the lawsuit and asked that the court's nationwide injunction be stayed. HHS also asked for an extension of the deadline to answer the complaint until March 1, 2017. On January 24, Judge O'Connor ruled on both motions.
He opined that the putative interveners met three of the four requirements for intervention as of right in that they had filed their motion to intervene in a timely manner, had an interest in the subject matter of the action, and were situated in such a way that the court's decision on the merits could practically affect their interests. The court held, however, that it was not yet clear that the Trump administration would not protect the putative interveners' rights, and thus they had not yet established the fourth requirement that must be shown to establish a right to intervene.
The putative interveners had also moved for permissive intervention. To succeed on this motion they needed to show that a grant of their motion would not cause prejudice or delay to the other parties. The court asked the plaintiffs and HHS to brief whether granting the putative interveners' motion would cause prejudice or delay and held the motion pending that briefing.
The interveners had further requested that the court's nationwide preliminary injunction be stayed. The court rejected this motion, but in doing so clarified somewhat its injunction. Judge O'Connor observed that his order did not "permit a health care provider to refuse routine care to a woman because she has previously had an abortion," which is all that I read the 1557 rule to prohibit with respect to abortion.
Judge O'Connor also observed that his ruling did not affect protections provided by the underlying law. However, he reaffirmed his belief that statutory prohibitions against sex discrimination under Title IX, which is incorporated by section 1557, do not prohibit discrimination on the basis of gender identity or termination of pregnancy, which the enjoined provisions of the 1557 rule prohibited. Judge O'Connor also held that the putative interveners had not shown that they would be irreparably injured by his order.
Finally, Judge O'Connor gave HHS until March 1 to answer the plaintiff's complaint, which is also the date when any appeal of his preliminary injunction would be due.
Rand Paul Offers ACA Replacement Proposal
January 25 saw the release of another Republican ACA replacement plan, this one from Senator Rand Paul (R-KY), a doctor and the only Republican Senator to vote against the ACA repeal budget resolution. Senator Paul only released a summary of his plan and a press release; the full legislative language may warrant further comment when it is released.
In brief, Paul's plan would:
- Selectively repeal some ACA provisions, including the individual and employer mandates, the community rating restrictions, rate review, essential health benefit requirements, medical loss ratio requirements, and other mandates, but not the remainder of the ACA;
- Provide a two-year open enrollment period, after which it would only require pre-existing condition coverage to individuals who maintain continuous coverage;
- Change the employer tax exclusion to an income and payroll tax deduction, presumably capped, that would apply to all coverage;
- Eliminate most restrictions on health savings accounts and allow the use of HSA funds to purchase insurance, which would not have to be high-deductible coverage. Many of the HSA expansion provisions mirror those found in the House Republican Study Committee bill.
- Apparently permit individuals to opt for a tax credit of up to $5,000 to fund their HSA in lieu of a tax deduction. This would probably be of more value to lower-income individuals who would find little benefit in a tax deduction;
- Encourage association health plans in both the individual and small group market;
- Allow physicians a tax deduction for charity care and bad debt and an antitrust waiver for collective bargaining with medical plans;
- Permit the sale of insurance across state lines subject to certain consumer protections; and,
- Give states greater flexibility in obtaining Medicaid waivers.
Much of the Paul plan seems to copy other proposals, and its most original contribution is allowing individuals to choose between a tax deduction and credit, if that is what it does. Paul had suggested earlier that President Trump supported his plan, but the description Paul has released of his plan does not seem to track the glimpses Trump has offered into his ideas on reform.
CBO Lays Out New Coverage Projections
Finally, on January 24, the Congressional Budget Office released a report on the Budget and Economic Outlook: 2017 – 2027. The report projects that 10 million people on average will have health insurance purchased through the marketplaces in 2017, with 9 million per month receiving subsidies. It projects that by 2027, 13 million people will have coverage through the marketplaces, with 11 million receiving subsidies. The total nongroup market will cover 18 million people in 2017 and 20 million by 2027. In 2017, 12 million people have Medicaid because of ACA expanded Medicaid coverage, and 17 million will have it by 2027. Between 2017 and 2027, between 27 and 28 million people under age 65 will be uninsured.
These numbers are similar to projections from March of 2016, with an increase in the projected number of individuals covered by Medicaid (up from 11 million for 2017 and 15 million for 2026) and a decrease in the projected number of individuals covered by the marketplaces (down from 15 million for 2017 and 18 million for 2026). The projected number of uninsured remains the same, however, suggesting that they are seeing growth in coverage through employer-sponsored coverage or Medicare. Given the extreme uncertainty regarding the future of the ACA at this point, it is not surprising that projections of ACA coverage for the future would be modest.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2junhLj
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